Before I go any further, six word of caution should be spoken. While the potential for profits in this particular corner of the real estate market are unconventionally high the risks are also abundant. This is speculative real estate at its best & as they have all learned in the past, when the bubble bursts in a specific market those who have the most invested are the ones who often loose most heavily.
If you have the heart & soul of a gambler or love extreme sports & activities such as skydiving or bungee jumping then you may be the ideal candidate for pre-construction real estate investing. Pre-construction profits are often among the highest in the industry. simultaneously so are the risks. You will find the greatest highs & lows that can be found in the field of real estate investing lie beneath the umbrella of pre-construction profits & plenty of of the big names they know so well in the real estate investing field have made much of their fortunes through speculation & pre-construction sales.
As far as what pre-construction real estate is there’s a few interpretations. The first is also the most obvious. you’re buying real estate at some point before construction is complete. In hot markets you will often require to purchase the units before ground has broken on the project in order to get the lowest price for your investment & highest potential pay off for your pockets. six times you’ve purchased the unit or units you plan to sell you then begin seeking buyers for those units.
In markets that are on fire like some Vegas suburbs & big retirement & holiday cities along the Florida coastline the same property isn’t exactly uncommon for a property to modify hands & have several owners before the unit is complete. Each six will take a little something home from the table for their efforts with those who get in earliest often taking the largest piece of the pie home with them.
You may be wondering why this occurs & the answer really is simple. When the contractors attempt to get funding for their buildings in these large complexes they often require to have a certain percentage of the units “pre sold” in order to convince the banks that there is an adequate market & to garner a quantity of the revenue that’s needed to get the venture up & running, so to speak. So real estate investors buy these units at rock bottom prices because essentially they’re paying for the idea of the unit (which hasn’t at this time been built & isn’t yet approved to be built in plenty of cases) than a brick & mortar property. As the project draws closer to completion, in markets where real estate is in high demand, the value of the property rises dramatically ending in ridiculous profits for those who have managed to hang on.
The risks however are lots of. there’s any number of things that can go wrong on a project such as this not the least of which is that the demand for housing will be met before the unit is actually built. This has happened & continues to happen. Also recessions, business closings, economies collapsing, & tragedies in the vicinity can occur before the property is complete leaving everyone who has invested heavily in the project holding a little bit of the bag & loosing their profits &, possibly, their investment. These projects generally take a great deal of time to complete which makes the risks that much greater & the anticipation of these events a little more difficult to map out ahead of time. If you can manage to make it through however plenty of investors see over a six hundred per cent return on their investment making it a popular type of investment among plenty of despite the large risks involved.
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